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Agenda Item 6A1: Proposed Decisions of Administrative Law

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Agenda Item 6A1: Proposed Decisions of Administrative Law ATTACHMENT A THE PROPOSED DECISION Attachment A BOARD OF ADMINISTRATION PUBLIC EMPLOYEES' RETIREMENT SYSTEM STATE OF CALIFORNIA In the Matter of the Calculation of the Final Agency Case No. 2011-0789 Compensation of: PIER'ANGELA SPACCIA, OAH No. 2012020198 Applicant/Respondent, and CITY OF BELL, Public Entity/Respondent. PROPOSED DECISION James Ahler, Administrative Law Judge, Office of Administrative Hearings, State ofCalifornia, heard this matter on August 27,28 and 29,2012, and on December 27,2012, in Orange, California. Wesley E. Kennedy, Senior Staff Counsel, represented Petitioner Marion Montez, Assistant Division Chief, Customer Account Services Division, California Public Employees' Retirement System, State ofCalifornia. Harland Braun, Attorney at Law, represented Applicant/Respondent Pier'Angela Spaccia, who was present throughoutthe administrative proceeding. Stephen R. Onstot, Attorney at Law, represented Public Entity/Respondent City ofBell. The matter was submitted on January 28,2013. SUMMARY A preponderance of the evidence established that the earnings received by Pier'Angela Spaccia under her July 1,2003, employmentagreement with the City of , CALIFORNIA PUBLIC EMPLOYEES RETIREMENT SYSTEM Bell should be used to calculate her service retirement allowance and that Ms. Spaccia is entitled to receive five years air time purchased on her behalfby the City of Bell. FACTUAL FINDINGS Stipulated Matters 1. The California Public Employees Retirement System (CalPERS) manages pension and health benefits for California public employees, retirees and their families. Retirement benefits are provided under defined benefit plans that are funded by member and employee contributions and by interest and earnings on those contributions. 2. A service retirement allowance is calculated by using a formula that includes the member's years ofservice, age at retirement, and final compensation. "Final compensation" is defined as the highest average consecutive 12 or 36 months ofcovered service. "Compensation earnable" is defined as "payrate" and "special compensation." In computing a member's service retirement allowance, CalPERS' staff may review the salary reported by an employer to ensure that only those items allowedunder the Public Employee Retirement Law (PERL) areincluded in a member's "final compensation." 3. The City of Bell was and is a public agency that contracted with CalPERS for the provision ofbenefits to eligible employees under the PERL. 4. Pier'Angela Spacciawas employed by the City of Bell from July 1, 2003, until October 1,2010, and by other participating public agencies before her employment with the City ofBell. 5. On October 1,2010, Ms. Spaccia submitted an application to CalPERS for a service retirement pending determination ofher application for an industrial disability retirement. Ms. Spaccia requestedthat CalPERS use the highest average compensation she received from the City of Bell as her "final compensation." 6. CalPERS reviewed the compensation the City of Bell reported it had paidto Ms. Spaccia and concluded that the reported payrate was not "compensation earnable" and should not be used to calculate Ms. Spaccia's retirement allowance because Ms. Spaccia was not the paid pursuant to a publically available pay schedule. CalPERS determined Ms. Spaccia's retirement allowance should be based on "compensation earnable"that was paid to herby other (non-City of Bell) public agencies. 7. By letter dated December 2,2010, Ms. Spaccia was notified of CalPERS' determination and her right to appeal. CalPERS laternotified Ms. Spaccia 2 that the City of Bell's direct purchase of five yearsof additional, retirement service ("air time") for her was improper and had to be rescinded. 8. By letter dated December 27,2010, Ms. Spaccia timely appealed from CalPERS's determinations and requested an administrative hearing. 9. Petitioner Marion Montez, Assistant Division Chief, Customer Account Services Division, California Public Employees' Retirement System, signed the Statement of Issues giving rise to this administrative proceeding. Ms. Spaccia's Employment History BeforeJuly 2003 10. In January 1980, Ms. Spacciabegan employment with the City of Ventura. She was employed there for approximately 11 years. She received several promotions, ultimately serving as Director ofManagement Services. Ms. Spaccia terminated her employment with the City ofVentura in 1990 to work for the Los Angeles County Transportation Commission (LACTC). Ms. Spaccia began employment with the LACTC in 1990. During her employment, LACTC merged with the Southern California Rapid Transit District (SCRTD). Ms. Spaccia was employed by SCRTD through 1994 and became Director of Management Services. Ms. Spaccia married in 1994 and moved to Idaho. While living in Idaho, she was employed as an Associate Director ofthe YWCA and then as Finance Director for Kootenai County. Ms. Spaccia and her son returned to California in 2000. In 2000, Ms. Spaccia was employed briefly by the Old Globe Theater in San Diego, and was then employed by the North County Transit District. In 2001, Ms. Spaccia returned to Ventura County where she was employed by the County ofVentura as an Assistant to the Chief Executive Officer. When a new administration was elected, Ms. Spaccia obtained employment with Moreland and Associates. It was through her employment with Moreland and Associates that Ms. Spaccia became associated with the City of Bell. Ms. Spaccia's employment with some ofthe California public entities resulted in member and employer contributions to CalPERS and Ms. Spaccia's credited service with CalPERS for retirement purposes. The City ofBell 11. The City of Bell is an incorporated suburb located several miles south of the City ofLos Angeles. The City of Bell envelops about two anda half square miles within its city limits. Its population is about35,000. In 2005, the City ofBell became a charter city, which exempted the City of Bell from a state law that limits the pay ofindividuals who serve as city council members. Ms. Spaccia's Employment with the City ofBell 12. In 2003, the City of Bell offered Ms. Spaccia full time employment to serve as the assistant to Chief Administrative Officer Robert Rizzo (CAO Rizzo) on a permanentbasis. The City of Bell employed Ms. Spaccia from July 1,2003, until October 1,2010. 13. Ms. Spaccia was first employed under an Agreement for Employment dated July 1,2003. The original agreement for employment stated that the City of Bell was a general-lawcity, that the City of Bell desired to employ Ms. Spaccia as the assistant to the Chief Administrative Officer, and that the parties wanted to provide various procedures,benefits and requirements relating to Ms. Spaccia's employment. The agreement stated that Ms. Spaccia's duties were "as set forth in the City ofBell Municipal Code and other applicable laws and regulations, and [that she was] to performsuch other proper duties as assigned by the Chief Administrative Office (CAO) of the City." Ms. Spaccia's basic salary was "$3,935.00 per pay period"1 and the salary could "be adjusted by the City Council, in its sole discretion, on or before each anniversary date ofthis Agreement." 14. An agenda for the City Council meeting occurring on June 30,2003, was produced. Item IV - the Consent Calendar - stated that action would be taken on several items that were routine and non-controversial without discussion by the City Council. Resolution 2003-29, a resolution identifying an employee compensation plan, was noticed for that City Council meeting, as was Resolution 2003-31, a resolution designating certain full time city officers and employees as being unrepresented. Ms. Spaccia's original agreement for employment was placed on the City Council's agenda and was made availableto the public as part ofthe agenda packet for the June 30,2003, City Council meeting. The City Council formally approvedthe agreement at that meeting. 15. Duringher employment with the City of Bell, Ms. Spaccia provided oversight and mentoring for Lourdes Garcia,(then) the City of Bell's Director of Administrative Services, organized the annual low rider car show, planned a 1 The term "pay period" was not defined inthe agreement, but common usagewithin the City of Bell established thata "pay period"was every two weeks. Using this agreement as a base, Ms. Spaccia was earning$8,525.83 per month, or $102,310 per yearunder the original employment agreement. skateboard park, and performed other duties assigned by CAO Rizzo. Ms. Spaccia did not have a direct supervisor, reported directly to CAO Rizzo, and often worked from her home. Ms. Spaccia, an unrepresented miscellaneous city employee, had no formal job description, was not a department head, did not supervise others, and had no budgetary responsibilities. While she was always employed at a regular salary, determining Ms. Spaccia's actual work related group or class within the City ofBell presented classification problems. Ms. Spaccia appears to be properly classified with other City of Bell unrepresented management personnel. Other EmploymentDocuments 16. A number ofdocuments relating to Ms. Spaccia's employment with the City ofBell were produced in addition to the Agreement for Employment dated July 1,2003. These documents were never placed on a City Council agenda and were not made available to the public before any hearing. These documents are summarized as follows: A. Addendum Number One to Agreement for Employment dated July 1.2004, increased Ms. Spaccia's basic salary by $1,065 per pay period subject to the condition that the City experienced a positive cash position. The addendum was signed by George Cole, (then) Mayor. No specific duties were specified. B. Addendum Number Two to Agreement for Employment dated July 1.2005, modified Ms. Spaccia's basic salary as follows: (a) $7,115.40 per pay period effective July 1,2005; (b) $7,884.65 per pay period effective July 1,2006; (c) $8,846.16 per pay period effective July 1,2007; (d) $9,615.40 per pay period effective July 1, 2008. Each salary increase was contingent upon the City having a positive cash position.
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